Tue Feb 12, 2013 at 11:13:21 AM EST

(Interesting argument on the "200-proof politics," and I'm all for a reasonable transportation compromise on policy grounds, as long as it doesn't reduce the gas tax (ideally, it would increase it to make up for all the lost years of inflation) and doesn't raid education and other important general fund items. How hard is that? - promoted by lowkell)

by Paul Goldman

I like Dick Saslaw. But this is a column about 200-proof politics, meaning the chips fall where they may. By end of the week, Terry McAuliffe could have HAD a 95% chance of being the de facto Governor of Virginia. That's right: the electric car guy might have been be able to drive, without filling up the tank, all the way to the Governor's Mansion on a route mapped out by Governor McDonnell's transportation proposal.

The governor's plan has cleared the House and is now before the Senate. If the Senate simply passes the bill sent over from House, it would presumably be signed by the governor real quick, since there is precedent for the last body to enact legislation to recall it before inked. At which point: Terry Mac, to a mathematical 95% certainty, would be the next governor of Virginia. He would break his smart silence to date, and join Senate Democrats, House Republicans and a conservative GOP governor in backing an historic transportation.

Given what we know today - see Steve Contorno's column in the Washington Examiner - the 2013 GOP ticket will consist of three individuals who do not support the governor's plan. This rejection by Republican candidates of Gov. McDonnell would likely spur Lt. Governor Bill Bolling to run as an independent candidate for governor, the only GOP pro-McD hopeful on the ballot, rightly claiming to be the popular chief executive's true heir. This would create a big split in the GOP, leaving Terry Mac an easy winner, running as the bipartisan business guy who is not afraid to join with the other side to fix problems.

What's not to like on the Democratic side of the chess board? What would be the GOP ticket's counter message?

As I wrote yesterday, they might be able to go the populist route: but there is no indication they (1) are ready to do it, (2) have the talent to do it, (3) would be credible doing it, and (4) it would work. It has potential, but there is nothing in the record yet to say this strategy could be executed.

It is far more likely they would simply go the anti-tax mantra, claiming in effect that McDonnell and McAuliffe and Bolling are part of the "high tax lobby." Say what?

Like I say, the chances of that flying are 5% right now: and that's only because you got to leave a fudge factor in February for a race not actually up for a vote until November. Nine months is a long time. So stuff can happen.

But looking at things on a pure 200-proof basis: 95 out of 100 times, this kind of political chess board is going to cause a Democratic Party sweep. Bob McDonnell is now some high-tax liberal? Those making that charge would lose total credibility with the Virginians who approve of his performance as governor. When was the last time a Democratic candidate got beat because he had a Republican governor watching his back on the tax and transportation issue? Like never, anywhere.

Except for one problem: Senator Saslaw, and almost all other General Assembly Democrats, are adamantly opposed to the governor's transportation plan. They have any number of policy reasons. Many consider it simply morally wrong to go from the user fee concept to the sales tax; they feel it is too regressive.

Let me make three points:

First, going to a sales tax actually makes things less regressive, especially if you were to put a small refundable tax credit for the poor to deal with any such concerns. Do the math.

The Democrats abandoned the user fee concept in 1986 when backing the first sales tax for transportation, when they supported allowing localities to pass a local income tax for transportation, and when they supported allowing localities to levy a regional sales tax for transportation. So with all due respect, that ship has sailed.

Sometimes, you got to take Teddy Roosevelt's advice: The first thing a patriot may need to do is get himself or herself elected to office. So you pull back your jet skis a little. This doesn't make you a sellout.

Call me damaged goods: But frankly, I see only a phony moral dilemma here. There is no pure and perfect transportation policy. McDonnell's proposal, like any from Democrats generally or House Republicans specifically, is based on policy to the extent possible, and then politics to the extent unavoidable. It is now down to the 200-proof politics, like it or not.

So the choice is clear. If Democrats pass the House bill as is, game over unless Terry Mac is gonna be like the guys at City College in the 1950's, blowing a game they should have won because they got a little too cute in their "point shaving" scandal.

OR: Democrats can do what Senator Saslaw wants, help pass a different kind of transportation plan, built around higher taxes, out of the Senate, setting up a conference committee shootout with the House.

The governor's plan could conceivably be the default position of the Conference Committee. But all bets are off at that point: anything could happen including the whole thing going down in flames in both houses.

More to the point: Even if something passes, it might create such a fog of politics that a Republican could be against it without creating the statewide dynamic guaranteed by Senate Democrats supporting the governor's plan this week.

So the two choices provide starkly different pictures. One gives Democrats a clean, clear, line in the sand, putting their ticket and Governor McDonnell against the Tea Party wing of the GOP. If this isn't political heaven, then what is?

The other offers uncertainty, resting on the law of unexpected consequences. Saslaw has a good policy point. But he is on shaky political ground Call me chicken if you want: But I will stick with Coach Lombardi on this one. In politics, run to daylight. They are giving you a power sweep to the right side of the line.

Dems don't get this but once a century maybe. Why go left? Run down the field for a TD and then run out the clock. Come 2014, it is new cast of characters in Richmond and you got 4 years to indulge in the fruitless pursuit of policy purity.

5:50 - You talk about over-stepping bounds and some people would suggest that perhaps you have overstepped your bounds when it came to offering or endorsing a transportation plan that was in variance with the plan offered by the Governor...so what is going to emerge in all of this?

6:10 - Well in Virginia we've got 11 days left in the general assembly session. The next two days, today and tomorrow, are going to be very, very important on the Senate side to see what survives on the transportation front. I have continued to encourage my friends and colleagues there in the Capitol to keep pushing for something constructive, that is not wild-eyed and does more harm than good.
- Is that what you think of the Governor's plan? Hold it hold it, are you suggesting...

Regardless of what comes out, there's going to be more to do.
- Are you suggesting the Governor's plan is "wild-eyed"?

Oh come on Brian.
- I don't know what you're saying.

Quit smoking that stuff, it's not legal yet! We immediately were supportive of the governor's efforts, this is a long process...I know it's got a lot of iterations to go through, but it's crunch time now.

As Jefferson might have said, self-evidentially quite hard. Making up for inflation requires probably a 10 cent gas tax increase which is only half-way to Saslaw and McEachin's $1 billion dollar goal. If Democrats vote for a 10 cent gas increase, and somehow enough Republicans, along with McDonnell lose their mind and help enact it into law, Cuccinelli becomes the favorite to win even if McAuliffe opposes it.

...it is the substitution of the gas tax for the sales tax. For the poor who don't drive, they would be paying sales tax in place of a gas tax they don't pay now. The average income based on public transit studies puts the income about 20K a year. Most of this money is spent on stuff that doesn't get sales taxed. So you do the math on a %.8 increase. If you do a refundable credit of a small amount it should balance them out as best we can in a mega policy move.

At the top end, the higher end folks are going to get the cars that have the super MPG. Thus, if you keep the gas tax, the middle income folks and poorer folks with cars will be driving the older cars with far lower gas mileage.

Thus, if you do the math, it actually comes out that counting growth in the sales tax over time, using the sales tax actually makes the overall situation less regressive.

This is a statistical fact: play it out for the next 10 years as incomes grow, etc, as you get hybrid cars and higher mileage stuff, etc.

The issue isn't whether the sales tax is regressive.

Why then did everyone back Warner's sales tax, why wasn't that regressive?

As I say, there isn't any purity in these kinds of debates. It is about what you can pass in the context of better or worser policy options.

Keep the overall sales tax at 5%, but put in an additional 5% sales tax on fuels. Keep the per-gallon gas tax at 17.5 cents, but modify it to adjust up with CPI.

At current prices, this would roughly double the existing per-gallon gas tax, but have the benefit of being a straight percentage, regardless of the price. If gas prices spike again at close to $5.00, it's a two-fer - higher revenue, and an extra kicker to get consumers to buy more fuel-efficient cars and trucks.

Senate Democrats Support a New Plan:
A Long-Term, Sustainable Transportation Solution

Bipartisan plan will raise $900 million a year for statewide transportation when fully implemented

RICHMOND, VA - Today, Senate Democrats on the Finance Committee voted for a transportation compromise proposed by Senator Frank Wagner. The bill passed the committee on a bipartisan vote of 9 to 6, with every Democrat and several Republicans supporting.

Senator Richard L. Saslaw (D-Fairfax) said, "This is a good plan that will finally begin to solve our transportation funding problems. It raises the revenue our state desperately needs to repair our roads and begin long-delayed new construction. Governor McDonnell and the House of Delegates should take this plan very seriously, and I look forward to moving this legislation forward."

Senator Janet D. Howell (D-Fairfax) said, "A proposal like this has been long overdue. I'm pleased the committee voted for this serious, long-term plan to fund our transportation needs. This plan also gives the congested urban parts of our state the flexibility they need to begin solving their unique transportation problems. This is a good plan, and I look forward to working towards a proposal with the House of Delegates and Governor McDonnell."

Background

This plan raises the gas tax by 5 cents and indexes it to the cost of the construction materials it takes to build roads. It imposes a new 1% tax on wholesale gasoline (a "rack tax"), and increases the car registration fee by $15.

The plan directs an additional 0.05 percentage points of the state sales tax toward transportation.

In the event the Marketplace Equity Act (MEA) passes Congress, two-thirds of that online sales tax revenue will be earmarked for transportation. Just under 20% will be directed to public education, with the balance going to localities. If the Marketplace Equity Act fails to pass, the wholesale gas tax mentioned above will rise to 2%.

The plan also gives the three heavily congested urban regions the flexibility to raise revenue to address their unique transportation needs. Northern Virginia, Hampton Roads, and Central Virginia will each be allowed to create and earn revenue from a new regional sales tax of up to 1%.

RICHMOND- Governor Bob McDonnell issued the following statement this morning following passage by the Senate Finance Committee of a transportation bill. The bill passed the committee on a 9-6 vote, with bipartisan support.

"This morning, another step was taken towards passage of a comprehensive long-term transportation funding plan for the Commonwealth. It is imperative that we find a solution now to solve the Commonwealth's growing transportation needs. We are on the brink of getting such a plan passed. Now, both chambers and both parties need to come together to craft a final plan that can pass both the House and Senate, and that I will sign. That plan must be fiscally responsible and balanced.

The bill approved by the Senate Finance Committee today is much different in scope from our original proposal, although it contains several key elements. The Senate bill uses far too little in general funds, which is an essential part of a solution. I remain convinced that the gas tax is a declining revenue source and therefore we must look for new ways to meet our growing transportation needs. The Senate bill, though, will raise gas taxes and gas prices for the consumer. However, it is important to remember; today's action is not a final bill. Instead, it simply advanced the process of passing a final transportation plan to the next step.

Tomorrow, the full Senate will take up this legislation. It is imperative that the Senate move the process forward again. By passing a bill, this legislation can proceed into conference committee where more changes and thoughtful final decision-making can occur. I fully expect a final transportation bill to be more fiscally responsible and balanced, recognizing transportation is a core function of state government. It is also critical to ensure that the conference report legislation can be supported in both the House of Delegates and the State Senate, and is legislation that I can sign into law. Today's vote continues the legislative process. Now, we must work together to finish it with approval of a common-sense, fiscally responsible transportation plan that both works for Virginia's citizens and can pass the General Assembly. I look forward to working with legislators to accomplish this goal in the days ahead."

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